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New sales tax return not workable: Sales Tax Bar Association

KARACHI (June 09 2008): The proposed new sales tax return, being implemented from coming budget, is not workable and could create difficulties for taxpayers owing to its amendments, which are not considerable in Sales tax Act.

This was stated by Karachi Sales Tax Bar Association (KSTBA) in its comments regarding new sales tax return implementation.

The bar has sent its comments to Federal Board of Revenue for further review. Talking to Business Recorder, Khushnood A Khan, President, KSTBA said that the new format of sales and purchase summaries were not in accordance with the SRO 559(1)/2006, wherein registered importer, wholesaler and manufacturer are required to submit summaries from registered persons only in a summarised form. However, now it is being asked to provide complete details regarding purchases and sales, either it is taxable, zero rated, or exempted in proposed summaries forms.

He said that Special Excise Duty (SED) column of sales tax return might be incorporated in this annexure, which creates problems for taxpayers in e-filing, hence it was suggested that SED should be separated on the return.

He termed the proposed return as complicated, adding that the column for cost of sale was entitled as 'value of quantity supplied,' which was not understandable to taxpayers owing to low literacy rate. Therefore, it was suggested to rename the column as cost of sale to facilitate taxpayers.

He said that column regarding sales tax withheld was also not workable because sales tax is required to be withheld at the time of actual payments while the rate column in the summary was also provided before value of sales.

He said that KSTBA had cited many flaws in the proposed return, which should be rectified. He said that the rate of sales tax @17.50 percent was appearing in the main summary as18 percent.

According to present sales tax law proposed summary is not workable, hence, amendments are required in the proposed budget to supply such information for its effective implementation. KSTBA has sent its comments to facilitate budget makers in this regard, he added. He maintained that column of revised return was also not workable in present return, which creates difficulties for taxpayers to revise their return in case of some changes in output or input record. He urged the concerned authorities to take measures to rectify these problems..

At present commercial importer is required to file only quarterly return, while, importer can also file the monthly statements through e-filing. But in the proposed return these summaries are linked with the monthly return, which is not required to be filed by commercial importer. Therefore, options to file only summaries through e-filing must be available through proposed return, he observed.

He further said that columns for refund claims for FED and SED were not present in the proposed return, which should be added in its to facilitate taxpayers at maximum.

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